Why aren't downloads cheaper than physical CD sales?

Apart from the minor issue that if I shoplift or steal a car, I physically now possess something that someone else does now not.

Not saying it isn't "wrong", but there is absolutely a difference.

99 cents for a single on iTunes. A physical CD single is $3.99 to 5.99.

Since I've never bought a cd single in my life, I was more interested in comparing album pricing.

At the magical $9.99 price, you can buy the album on itunes/napster/y! music or you get a physical CD (sometimes the CD is on sale, but let's assume it isn't). I'll leave the various benefits of the CD over the drm wrappered electonic media aside for the time being, but would like to focus on the costs involved.

It would seem to me that the electonic media would have a much lower cost for the label to produce. I imagine that the costs to produce the cd itself run in the $1-2 range. Since the sale price is the same, does the artist get more money for electronic sales, or does the record label keep the extra as profit?

Why aren't the savings passed on to the consumer?

I think of iTunes and the like as singles medium (the growth has certainly been through singles sales, but not album sales).

However, a new CD in a store would cost $13-20, so the download has quite a discount.

Simple economics state that they will charge whatever the market will bear (physical or virtual). This has no relation with the cost of production -- "passing the savings along" is a myth for products of all kind (see every other forum on Flyertalk as an example -- airline seats, hotel rooms, car rentals, etc.).

Simplistic economics might say that!

A slightly more nuanced view would say that the marginal cost of production is relevant, because profit maximization is achieved when marginal cost is equal to marginal revenue.

Of course, that's based on the assumption that a record company is a rational actor in the economic sense...

Because the record companies are greedy and dumb. I don't mind that they're greedy - their business is after all getting as much as possible for their product. I believe lowering the price would cause a vast increase in sales though. P2P is free money-wise, but it's a giant PITA. At $.25-$.50 song, it's really no contest.

Unfortunately,the record companies are still living in the past, and still up to their bad tricks. Which doesn't give us the right to steal their product.

It appears that allofmp3 is digging in its heels:

http://www.mercurynews.com/mld/mercu...a/15781533.htm

Interesting mention of how unnamed record labels have tried to sue a Danish ISP to block its subscribers from accessing the Russian site. Methinks the recording industry casts an envious eye on the Chinese model of controlling access--if you can beat 'em, block them out at the firewall.

if the record companies do their own allofmp3.

NO DRM, if people want it free they will get it free.

1USD it 10x too much for a song which has not cover ,no booklet , well nothing.

make the price for one song something within 10 cent ot 20 cent.
and people will buy the album. actually if you can buy an album for 2.40 USD would you continue stealing the music?

there are suckers who want it for free, well these kids they will exist forever and it will never change, but these kids are later the guys who will spent money on downloading music.

it should be possible to make the P2P system a paid system too. for example bittorrent this platform is great, if you make one song 1 Cent and not free, that will be a lot money generated.

the music industry and the cinema industry are idiots which are trying to protect their old business system which wont work anymore as we all know that the internet did change our life.

cinema industry for example has the following distribution channels:

cinema -> paytv/ airlines -> DVD rental / sale -> Free TV.

so they want to make make money in each of these steps. what i hate about this system is the REGION CODE setting, why shouldnt i be allowed to buy an US DVD in europe or an other country version in another country. in many countries this is not allowed.


than the Music industry has this super system

First releasing 4-5 singles , after that selling the whole CD , radio, TV well there are enough channels to make money with this too, but the whole process is ignoring that the consumer WANTS it FAST, and CHEAP and without DRM.



WELL , WAKE UP both movie and music industry , you are losing money if you are not offering a cheap download system.

dp

Apparently in response to VISA's suspension of card service to the site:

http://www.iht.com/articles/2006/10/...oney/music.php

Being able to steal the product really cuts down on allofmp3's overhead. Should Microsoft charge $5 for Windows just because you can buy a pirated copy for that much?

I suppose we can all continue to steal music (and at 5 cents a song that is what we are doing) right up until the point that artists quit making music because they can't feed themselves from the nonexistant royalties.

While I don't dispute your point, I have news for you: The recording industry has a long, sordid history of hiding or blatantly withholding royalties from an array of artists.

Artists are at the bottom of the food chain when it comes to dividing the proceeds from their records. After all the middle men have taken their cut, the average musician gets no more than 5 to 10% of the retail price. For most artists that's not enough to pay the rent.

The tip of the iceberg that tops the charts can feed itself on royalties, but the vast majority of musicians live from performing live.

Nothing new here. Artists managed to live from their music since before sound could be recorded. Not just the performers, but the composers as well. Bach and Beethoven never sold a single CD but that didn't stop 'em from making music.

Travel agencies have learned the hard way that technology rapidly reduces the monetary value of information. If record companies want to stay in business they'll have to think of alternative ways to generate revenue. DRM and lawsuits are not the answer.

By the way, ever heard of the P2P music sharing program SoulSeek? That was made by a record company.

Really. Considering the marginal cost of production is near zero, I'd say we're being robbed.